Investors Warned off Optimism

THE WEEK: Investors are being warned against too much optimism - while inflation has declined, equities are a better gauge of the stock market

Rodney Hobson 17 January, 2014 | 10:52AM

Let’s not be churlish: to see inflation down to the target 2% is a great psychological boost. But let us also be realistic: it is not all good news by a long chalk.

It is possible that some pundits will start to raise the spectre of deflation again – they seem to derive some sense of satisfaction from confronting a misery that is not on the horizon. Japan may have suffered a decade of downward spiral and parts of Europe may be getting a taste of it but the fact is that inflation in the UK has been persistently too high and there is no sign that we are going into reverse.

In fact, the consumer price index eased back only 0.1% in December and prices on the whole are still rising, just not as quickly. In fact, the retail price index has edged higher, not lower, and is still above CPI.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
AstraZeneca PLC8,549.00 GBX-0.22
Costain Group PLC58.00 GBX-6.45
GlaxoSmithKline PLC1,604.00 GBX0.41
Hays PLC122.90 GBX-1.05
Robert Walters PLC401.50 GBX0.75

About Author

Rodney Hobson

Rodney Hobson  is a columnist for and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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